October 09, 2007

The Morning Wrap

A Secret Wiretapping Program We Can All Agree OnThe New York Times reports this morning that Congressional Democrats appear ready to roll over on the Bush Administration’s domestic spying plan and extend the blanket authority it issued to the Bush administration in August. Just last week former senior Justice Department lawyer Jack Goldsmith called the government’s activities “a mess,” and suggested they were likely illegal, but nobody likes being called soft on terrorism. Some Democrats are trying to hold the line at retroactive immunity for telecom companies believed to have assisted in the National Security Agency’s eavesdropping efforts.

No More Taxes to Cut?The Wall Street Journal examines an issue that for decades has been a staple of Republican politics – slashing taxes. Yet the debate among leading presidential contenders appears anemic, the Journal reports, possibly because the current President has stolen its thunder. A few candidates are proposing further capital gains cuts (Romney) or the replacement of the income tax by a consumption tax (Huckabee and Thompson) but “the sheer size and cost of the Bush tax cuts has made it difficult for any of the candidates to place his own stamp on the topic by proposing significant new tax reductions,” the Journal writes – or even to repeal the much-hated Alternative Minimum Tax.

Pushback for Prosecutors White collar criminal defense lawyers are deploying a new tactic against aggressive securities prosecutions, The Wall Street Journal reports. Relying on a judge’s ruling in the KPMG case that prosecutors violated defendants’ civil rights by pressuring their former employers not to pay their legal fees, attorneys for jailed Dynergy exec Jamie Olis are seeking his release from prison.

Private Equity Wins? Senate Majority Leader Harry Reid has quietly informed private equity firms that they’re safe from tax increases this year, The Washington Post reports. According to a participant who attended one of the meetings in which Reid announced the hold up, the problem is simply the result of a busy Senate calendar. Still, it’s a coup for the firms, which have spent millions on a team of lobbyists to fight taxes on carried interest.

Air Freshener In one of the biggest Clean Air Act settlements to come down in a while, American Electric Power has agreed to spend up to $4.6 billion to clean up its emissions, The Washington Post reports. Included in that sum is likely money to clean up pollution in the Chesapeake Bay, where some of AEP’s pollution ends up.

Spies with Loose Lips The Site Intelligence Group, a private intelligence shop that has come to be a leading private trackers of Islamic terrorism activities, says the government betrayed its confidence and blew its secret connection to al-Qaeda last month, The Washington Post reports. On Sept. 7, before Osama bin Laden’s most recent video became public, SITE privately informed two senior Bush administration officials that it had obtained it, giving them access in exchange for a promise that they not reveal that the video was in circulation. “Within 20 minutes,” however, a range of intelligence agencies were downloading it, and by midafternoon, the Bush administration had leaked it worldwide. According to SITE’s founder, the leak destroyed a years-long intelligence effort, tipping al-Qaeda to its security breach. Government officials cited by the Post concede the leak took place, but “said the incident had no effect on U.S. intelligence-gathering efforts and did not diminish the government's ability to anticipate attacks,” the Post writes. Ok.

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Huckabee convinces many that he is ONE with the FairTax grassroots movement. While many - like Romney, and others, who are invested in the current income tax system - seek to demagog ( http://snipurl.com/taxpanelrebutted ) the well-researched FairTax plan, its acceptance in the professional / academic community ( http://snipurl.com/econsopenletter ) continues to grow. Renown economist Laurence Kotlikoff believes that failure to enact the FairTax - choosing instead to try to "flatten" what he deems to be a non-flattenable income tax system - will eventuate into an irrevocable economic meltdown ( http://snipurl.com/meltdowninprogress ) because of the hidden aspects of the current system that make political accountability impossible.

Romney's recent WEAK response to FairTax questioning on “This Week with Geo. Stephanopoulos ( http://www.youtube.com/watch?v=CW4fa6Z_4Po )” drew a sharp contrast between Huckabee and all other presidential front-runners who will not embrace it. Huckabee understands that what's wrong with the income tax can't be fixed with "a tap of the hammer, nor a twist of the screwdriver." That his opponents cling to the destructive Tax Code, the IRS, preserving political power of granting tax favors at continued cost to - and misery of - American families, invigorates his campaign's raison d'etre.

Of the FairTax, Huckabee asserts that it's...

• SIMPLE, easy to understand
• EFFICIENT, inexpensive to comply with and doesn't cause less-than-optimal business decisions for tax minimization purposes
• FAIR, FLAT, and FAMILY FRIENDLY, loophole-free, and everyone pays their share
• LOW TAX RATE is achieved by broad base with no exclusions
• PREDICTABLE, doesn't change, so financial planning is possible
• UNINTRUSIVE, doesn't intrude into our personal affairs or limit our liberty
• VISIBLE, not hidden from the public in tax-inflated prices or otherwise
• PRODUCTIVE, rewards - rather than penalizes - work and productivity

For INDIVIDUALS:
• No more tax on income - make as much as you wish
• You receive your full paycheck - no more deductions
• You pay the tax when you buy "at retail" - not "used"
• No more double taxation (e.g. like on current Capital Gains)
• Reduction of "pre-FairTaxed" retail prices by 20%-30%
• Adding back 29.9% FairTax maintains current price levels
• FairTax would constitute 23% portion of new prices
• Every household receives a monthly check, or "pre-bate"
• "Prebate" is "advance tax payback" for monthly consumption to poverty level
• FairTax's "prebate" ensures progressivity, poverty protection
• Finally, citizens are knowledgeable of what their tax IS
• Elimination of "parasitic" Income Tax industry
• NO MORE IRS. NO MORE FILING OF TAX RETURNS by individuals
• Those possessing illicit forms of income will ALSO pay the FairTax
• Households have more disposable income to purchase goods
• Savings is bolstered with reduction of interest rates

For BUSINESSES:
• Corporate income and payroll taxes revoked under FairTax
• Business compensated for collecting tax at "cash register"
• No more tax-related lawyers, lobbyists on company payrolls
• No more embedded (hidden) income/payroll taxes in prices
• Reduced costs. Competition - not tax policy - drives prices
• Off-shore "tax haven" headquarters can now return to U.S
• No more "favors" from politicians at expense of taxpayers
• Resources go to R&D and study of competition - not taxes
• Marketplace distortions eliminated for fair competition
• US exports increase their share of foreign markets

For THE COUNTRY:
• 7% - 13% economic growth projected in the first year of the FairTax
• Jobs return to the U.S.
• Foreign corporations "set up shop" in the U.S.
• Tax system trends are corrected to "enlarge the pie"
• Larger economic "pie," means thinner tax rate "slices"
• Initial 23% portion of price is pressured downward as "pie" increases
• No more "closed door" tax deals by politicians and business
• FairTax sets new global standard. Other countries will follow

While passionately supporting FairTax, Huckabee understands that, if elected President, Congress will have to present the bill for his signature. His call to action goes beyond his candidacy, Main Street will have to demand ( http://snipr.com/scrapthecode ) that their legislators deliver the bill.